Acorns vs Betterment vs Wealthfront
- About each brand
- Key features
- Summary of Acorns, Betterment, and Wealthfront
- Costs and fees
- Pros and cons
- What is Acorns Spend?
- Does Acorns invest in cryptocurrency?
- How do I grow my Acorns’ portfolio?
- What investments are in the Betterment core portfolio?
- Does Betterment support accounts for minors?
- Is Betterment a real bank?
- Is Wealthfront good for beginners?
- Does Wealthfront support socially responsible investing?
- Does Wealthfront hold individual stocks in addition to my managed portfolio?
- The bottom line
About each brand
- Checking: Betterment’s Checking plan includes a no-fee checking account (which comes with a Visa debit card) and a Cash Reserve which includes a high-yield cash account and “bucket money” to help users reach their financial goals. So, this plan basically offers a checking and a savings account in addition to Betterment’s in-depth financial resource and educational center. The Checking plan has a $0 minimum balance.
- Digital Investing: The Digital Investig plan charges a 0.25% annual fee and is built for users who plan to invest. This plan offers low-cost investing portfolios, socially responsible investing options, a variety of account choices (including joint accounts, IRAs, and trusts), auto features such as portfolio rebalancing, dividend reinvestment, and auto-adjust. The Digital Investing plan also offers users tax-saving strategies (i.e. tax-loss harvesting and asset location) and the option to add a Checking and Cash Reserve for no extra cost. The Digital Investing plan has a $0 minimum balance and ~$2.50 fee per year for every $1,000.
- Premium Investing: Betterment’s Premium Investing plan charges a 0.40% annual fee and includes all of the features of Digital Investing. The Premium Investing plan also gives users unlimited access to calls and emails with Betterment’s team of CFP professionals, in-depth advice on investments held outside of Betterment via a team of CFP professionals, and the option to add a Checking and Cash Reserve for no extra cost. The Premium Investing plan requires users to have a $100,000 minimum balance and charges ~$400 per year for every $100,000.
- Minimum investment. There’s no minimum investment required to open an Acorns account, however, the service does ask that users deposit $5 to start investing in one of the company’s pre-built portfolios.
- Automatic savings. Acorns gives users the power to invest as much or as little as they’d like via automatic round-ups or lump-sum transfers. Account-holders can also set up recurring deposits on a daily, weekly, or monthly basis. Users who opt to use the Personal or Family plans also have the option to open an Acorns Spend account. Acorns provides an online checking account and debit card. Acorns Spend doesn’t require a minimum balance and offers real-time round-ups to a user’s investment account.
- Investing for kids. Acorns Early, which is offered via the Family plan, makes it easy for account-holders to create UTMA/UGMA accounts for their children.
- Financial goal-setting. Betterment makes saving for a vacation, down payment, or large purchase (or whatever else it is a user has their eye on!) easy with its goal-based saving options. Based on a series of questions, Betterment suggests different goals for retirement, a safety net, etc. Each goal comes with a recommended target and asset allocation, both of which can be adjusted.
- High-yield cash account. Betterment gives users the option to open a Cash Reserve account. This high-yield savings account comes with an interest rate of 0.40%. There’s no minimum balance and users can move their money as often as they’d like sans fees.
- Financial planning packages. Betterment has two paid investment packages: Digital Investing and Premium Investing. Both packages offer low-cost investing portfolios, socially responsible investing options, multiple account choices (i.e. joint accounts, IRAs, and trusts), and tax-saving strategies. With Betterment’s Premium plan users are given unlimited access to emails and phone calls with CFP professionals.
- Path financial planning. Wealthfront offers a free financial planning tool called Path. It’s available on both mobile and desktop and helps users plan for college, purchase their first house, or get ready for retirement. Those who are interested in using Path do not need a Wealthfront account to use the service.
- Line of credit. Wealthfront is unique in that it gives account-holders who have at least $25,000 in their account the option to borrow up to 30% of the value of their portfolio without dealing with the hassle of filling out an application, paying fees, or undergoing a credit check.
- Account types. Wealthfront offers a variety of account types, including individual and joint taxable accounts; traditional, Roth, 401(k) rollover, and SEP IRAs; trusts, and 529 college savings plan accounts. Wealthfront does not support inherited/beneficiary IRAs.
Summary of Acorns, Betterment, and Wealthfront
|Platform||Minimum investment||Management fees||Tax-loss harvesting||Portfolio rebalancing|
|Acorns||$0||$1, $3, $5 per month based on the plan||No||Yes|
|Betterment||$0/$0/$100,000||0.25% for Digital Investing/0.40% for Premium Investing||Yes||Yes|
Costs and fees
Pros and cons
Acorns pros and cons
- There’s no balance minimum required to open an Acorns account, however, there is a $5 minimum to begin investing.
- Acorns is easy to use! Investing can seem daunting, especially for beginners. But with Acorns, users can automate their investments and learn everything there is to know about smart investment practices via Acorns’ educational resource center.
- Acorns auto-saving option makes it easy to save money. What’s more? Users can earn money whenever they shop at one or more of Acorns partner brands.
- There’s no fee for withdrawing funds, either. Users can grab their money anytime they’d like. Though it may take up to 6 business days for the funds to be in their bank account.
- Acorns offers portfolio diversification. Each dollar a user invests is automatically diversified over 7,000 stocks and bonds.
- According to the company website, customers’ investments are protected up to $500,000 (including $250,000 for claims for cash).
- Acorns doesn’t offer tax-loss harvesting or any form of tax assistance.
- The flat monthly fee ($1/$3/$5) is relatively high, especially for smaller accounts.
- Acorns has a limited selection of investment portfolio options and does not offer users the option to invest in individual stocks.
Betterment pros and cons
- Betterment offers fractional shares and allows users to open an account with a $0 minimum balance.
- Betterment members can make goal-based investment choices with Betterment’s goal-based savings options.
- Account-holders have access to customer support via phone, email, and one-on-one counseling Monday through Friday.
- Betterment offers a number of educational resources that can help new users learn how to invest. The Betterment site also has an extensive FAQ section.
- Betterment investments are protected by the Securities Investor Protection Corporation (SIPC). It covers up to $500,000 of missing assets, including a maximum of $250,000 for cash claims.
- Members who do not have a paid plan may be charged anywhere from $299 to $399 per call with a financial advisor via Betterment’s one-off Advice Packages.
- Betterment does not include investments in REIT ETFs.
Wealthfront pros and cons
- Wealthfront offers free financial planning
- Wealthfront provides users with referral incentives. For example, whenever a Wealthfront member refers a friend via their invitation link (and that friend uses it to open a Wealthfront account), they’ll get an additional $5,000 managed for free.
- Wealthfront investments are SIPC-insured. This protects assets up to $500,000 (including $250,000 in claims for cash).
- Wealthfront doesn’t buy fractional shares of ETFs.
- Joint accounts can only be accessed through the primary account holder’s login.
What is Acorns Spend?
Does Acorns invest in cryptocurrency?
How do I grow my Acorns’ portfolio?
What investments are in the Betterment core portfolio?
Does Betterment support accounts for minors?
Is Betterment a real bank?
Is Wealthfront good for beginners?
Does Wealthfront support socially responsible investing?
Does Wealthfront hold individual stocks in addition to my managed portfolio?
The bottom line
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